The Commission for Conciliation, Mediation and Arbitration (CCMA) is proud to announce that on 26 July 2018, at 10h00, history was made in that the Constitutional Court confirmed the CCMA’s ruling on the sole employer interpretation.

The case concerned the interpretation of Section 198A(3)(b) of the Labour Relations Act 66 of 1995 (LRA) and whether this deeming provision resulted in a “sole employment” relationship between a placed worker and a client or a “dual employment” relationship between a Temporary Employment Service (TES), a placed worker and a client. The Labour Appeals Court (LAC) set aside the order of the Labour Court (LC) and held that a placed worker who has worked for a period in excess of three months is no longer performing a temporary service and the client, as opposed to the TES, becomes the sole employer of the worker by virtue of section 198A(3)(b) of the LRA.

In 2015, Assign Services, a TES, placed 22 workers with Krost Shelving and Racking (Pty) Limited (Krost), a number of whom were Members of the National Union of Metalworkers of South Africa (NUMSA). The placed workers provided services to Krost for a period exceeding three (3) months and on a full time basis. Assign Services’ view was that Section 198A(3)(b) created a dual employer relationship, while NUMSA contended that a sole employer relationship resulted from the section. The CCMA supported NUMSA’s sole employer interpretation and ruled in its favour.

In the LC, it was held that a proper reading of the Section could not support the sole employer interpretation. It instead held that Section 198A(3)(b) created a dual employment relationship, in which both the TES and the client have rights and obligations in respect of the workers. In an appeal, by NUMSA, to the LAC it was found that the sole employer interpretation best protected the rights of placed workers and promoted the purpose of the LRA.

The Constitutional Court, in its majority judgement held that the purpose of Section 198A must be contextualised within the right to fair labour practices in section 23 of the Constitution and the purpose of the LRA as a whole. The majority found that, on an interpretation of Sections 198(2) and 198A(3)(b), for the first three (3) months the TES is the employer and then subsequent to that time lapse the client becomes the sole employer. The majority found that the language used by the legislature in section 198A(3)(b) of the LRA is plain and that when the language is interpreted in the context, it supports the sole employer interpretation. In the result, the Constitutional Court granted leave to appeal but dismissed the appeal with costs.

The CCMA Director, Cameron Sello Morajane said, “It is with great excitement that the Constitutional Court has confirmed the CCMA’s award on Section 198 interpretation. The appeal by Assign was dismissed with costs. It is a victory for the CCMA in terms of the quality of our awards. We are grateful to our World-Class Commissioner Abdool Carrim Osman for steering the ship over a stormy sea. This judgment will also change the lives of the country’s vulnerable workers who were exploited due to lack of clarity about their rightful employers.”